Counting war savings as deficit reduction is not entirely a gimmick, just mostly one.

Many months ago, well before the super committee deliberations began and even before the debt ceiling talks that begat the super committee in the first place, President Obama announced that he would begin drawing down the number of troops in Iraq and Afghanistan. Agree or disagree with the policy, the Congressional Budget Office estimates that this would save about $1.1 trillion (about $1.3 trillion once you add in interest savings) over 10 years.

There’s one catch, though: right now, there’s no law limiting our overseas troops. No legislation passed with a timetable. No schedule in the U.S. Code. Certainly, the Pentagon takes the president’s decision very, very seriously, and has been working hard to figure out the logistics of a drawdown. But CBO’s baseline budget projections—the ones the super committee must work off of—use enacted laws as their basis. From their perspective, then, the troop drawdown is just a verbal policy announcement by the commander-in-chief, and so its savings are not reflected in their baseline.

That creates an easy opportunity for the super committee. If Congress just passed a law committing ourselves to the troop reductions already announced by the president (again, months ago), then CBO would have to incorporate the $1.3 trillion in savings into their baseline. And since $1.2 trillion is the number the committee needs to reach to avoid automatic across-the-board spending cuts, it’s a near perfect political solution: no tough choices (the president already made them) and no dire consequences!

Of course, such a move would at a minimum violate the spirit of the committee’s charge. Many budget experts have called it a “gimmick,” and it sure does meet the smell test of one.

There’s one silver lining from counting war savings, however. Congress would most likely do so by passing a law capping war spending each year through 2021 (when Harry Reid tried to count war savings in his debt ceiling proposal, that’s how he did it). Capping war spending would actually reduce the risk of shenanigans elsewhere in the budget.

Remember that part 1 of the debt ceiling deal that Congress passed was a cap on discretionary spending, a large chunk of which is defense. But there was a catch: the cap excluded war spending. So diligent politicians seeking to avoid real cuts to defense have been working to get some programs and procurement reclassified as war spending.  Non-war defense spending would appear to stay below the required cap, but war spending would balloon beyond projections.

Capping war spending as well eliminates this perverse incentive. Members of Congress could no longer play a shell game with their preferred spending programs. Cuts would be cuts.

Luckily, it appears as though the super committee is not going to use this move as a way to reach their $1.2 trillion goal, just to pay for some additional stimulus.That leaves open the possibility that we get new deficit reduction plus the side benefits of a war spending cap.

Advertisement

Leave a Comment

Filed under Economics

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Connecting to %s